Why Simplification is the Ultimate Engineering Strategy

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2024/11/1.-Blog-Banner-2-Features-for-an-Effective-Loan-Origination-System_A-01-4.webp" alt="M2P Fintech" title="" width="100%" height="253">Today's borrowers seek a seamless digital experience with quicker approval and loan processing times when choosing a lender. The right features in a robust loan origination software can significantly transform the process.With a straight-through process (STP)-based Loan Origination System (LOS), lenders can not only improve the customer experience but also reduce the customer onboarding TAT significantly. Individual lender needs may vary in the top features of loan origination software, but we should prioritize certain must-have features.In this blog post, we will explore the essential features of loan origination systems that every lender must have. First, let's see what the Loan Origination System (LOS) is.<h2 class="heading-node" id="1ti242qg7" style="text-align: left">What is a Loan Origination System?</h2>A <a class="link" href="https://m2pfintech.com/loan-origination-system/">loan origination system</a> is a software solution that automates the entire loan process for lenders, right from lead generation and customer onboarding to credit assessment and transfer to the loan management system.Prior to the introduction of cloud-based loan origination systems, most lenders depended on legacy solutions to onboard borrowers, which significantly contributed to higher loss of leads and, thereby, revenue.On the other hand, the loan origination systems of today are mostly cloud-based and come equipped with a full suite of automations and integrations, which not only allows the lender to take better control of the entire loan origination process but also increases their overall efficiency and profitability.To ensure a seamless and efficient <a class="link" href="https://m2pfintech.com/blog/digital-lending-open-credit-enablement-network/">lending</a> process, lenders must consider essential features in their loan origination software.Here are the top five features every lender should consider in a modern loan origination system (LOS) to streamline operations and boost customer satisfaction.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2024/11/1.-Blog-Banner-2-Features-for-an-Effective-Loan-Origination-System_A-04-3.webp" alt="M2P Fintech" title="" id="efbtq652j" width="100%" height="317"><h3 class="heading-node" id="57yfiv5qm" style="text-align: left">Ease of Use</h3>Ease of use is a key feature of the loan origination system stemming from its low-code, workflow-driven platform. This allows lenders to tailor every aspect of the loan origination process to meet their specific needs. Here’s how it enhances <a class="link" href="https://m2pfintech.com/blog/5-key-features-to-elevate-lending-operations/">lending operations</a>:<ul class="list-node" id="re116bu6q"><li>Improved User Experience: A user-friendly interface minimizes confusion, allowing users to navigate the system more easily and reducing the chances of making mistakes.</li><li>Reduced Errors: User-friendly systems often employ standardized templates and dropdown menus, which promote consistent data entry and minimize variations that can lead to errors.</li></ul>Therefore, ease of use is not just convenience; it's a competitive advantage that leads to higher operational efficiency and a faster go-to-market.<h3 class="heading-node" id="3n6038ifv" style="text-align: left">Security &amp; Confidentiality</h3>Lenders handle vast amounts of personal and confidential information, making robust security measures essential to protect against data breaches, fraud, and unauthorized access.Irrespective of the provider you choose, the loan origination system should be able to distinguish and effectively control access between granted, moderated, and revoked files with ease.Here are the security protocols that should be in place for new-age lenders:<ul class="list-node" id="64tf9hsfu"><li>Data Protection: Advanced encryption and multi-factor authentication safeguard borrower information, ensuring that sensitive data remains secure.</li><li>Regulatory Compliance: Helps lenders stay compliant with regulations such as GDPR, PCI DSS, and other financial industry standards, reducing the risk of legal penalties.</li><li>Risk Mitigation: Strong security protocols help prevent unauthorized access, data leaks, and potential fraud, protecting the institution’s reputation and customer trust.</li></ul>Confidentiality Assurance: By enforcing strict access controls, only authorized personnel can view or modify sensitive information, minimizing the risk of insider threats or accidental data exposure.<h3 class="heading-node" id="6u3in0lfi" style="text-align: left">Holistic <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">APIs</a> &amp; Integrations</h3>The ability to integrate smoothly with third-party applications enables lenders to streamline the flow of information from various systems into a unified Loan Origination System.<a class="link" href="https://m2pfintech.com/blog/the-world-of-apis-how-they-power-fintech/">Holistic APIs</a> allow lenders to connect with credit bureaus, identity verification services, and other essential tools that streamline the loan process.This integration ensures that all necessary data is readily available for decision-making, reducing manual entry errors and speeding up approvals. Here’s how they benefit from lending operations:<ul class="list-node" id="nl8ceorz1"><li>Streamlined data flow: APIs allows smooth data exchange between credit bureaus, KYC systems, accounting software, and other platforms, reducing manual entry and errors.</li><li>Faster decision-making: Automated data sharing speeds up credit checks, approvals, and underwriting processes.</li><li>Operational efficiency: Integrations with external services simplify workflows, reducing bottlenecks and boosting productivity.</li><li>Scalability: Easily connect to new systems as the business grows without disrupting operations.</li><li>Improved customer experience: Faster, integrated processes lead to quicker loan approvals and more seamless borrower experience.</li></ul><h3 class="heading-node" id="tqk6svbqe" style="text-align: left">Domain Expertise</h3>Finally, a modern LOS should have built-in domain expertise specific to the lending industry. The simple reason behind this is that, in contrast to other industries where small errors might not accumulate severe financial losses, in the lending industry, even a minor flaw in the software might tarnish reputation among borrowers and result in severe financial loss. It also provides lenders with<ul class="list-node" id="jnivmogv0"><li>Customized solutions: Offers customized workflows and best practices, boosting operational efficiency.</li><li>Enhanced compliance management: By integrating compliance checks seamlessly, it reduces the risk of errors and regulatory penalties in a heavily regulated environment.</li><li>Accurate risk assessment: Understanding different loan products allows for better evaluation of borrower profiles, facilitating appropriate lending limits.</li><li>Streamlined processes: Automation of various lending processes, from application to underwriting, reduces approval times and enhances customer experience.</li></ul><h3 class="heading-node" id="asmk0k8a1" style="text-align: left">SaaS &amp; Future-Proof Technology</h3>Adopting the Software as a Service (SaaS) model provides flexibility and scalability that traditional systems cannot match. A cloud-based LOS allows lenders to access and use the software anytime, anywhere, irrespective of the device they operate. Modern loan origination systems, fully hosted on the cloud, ensure faster loan servicing and future-ready technology.This keeps their operations current with industry trends and regulatory changes, allowing them to adapt quickly without significant investment in new infrastructure.Investing in a modern Loan Origination System equipped with these five must-have features is essential for any lender to stay competitive in a fast-paced market.Ready to optimize your lending process?<a class="link" href="https://m2pfintech.com/contact-us/">Schedule a demo</a>&nbsp;to know how our modern Loan Origination Systems can drive measurable improvements in your lending workflow.<a class="link fui-Link ___1idfs5o f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" href="https://m2pfintech.com/newsletter/" target="_blank" rel="noreferrer noopener">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link fui-Link ___1idfs5o f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" href="https://www.linkedin.com/company/m2pfintech/mycompany/" target="_blank" rel="noreferrer noopener">LinkedIn</a>&nbsp;and&nbsp;<a class="link fui-Link ___1idfs5o f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" href="https://twitter.com/m2pfintech" target="_blank" rel="noreferrer noopener">Twitter</a>&nbsp;for insightful fintech bytes curated for curious minds like you.

5 Must-Have Features for Loan Origination System

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/11/Fleet-Drive-Blog-2-01.webp" alt="M2P Fintech" title="" width="100%" height="447">Logistics is the backbone of any growing economy. In India, the sector is valued at $250 billion and is expected to grow at 8% YoY to reach $330 billion by 2025. The road-based fleet industry, holding over <a class="link" href="https://rmi.org/insight/fast-tracking-freight-in-india-a-roadmap-for-clean-and-cost-effective-goods-transport/" target="_blank" rel="noopener">70% overall share</a> in freight transportation, is a synergy of about 15 million operational commercial vehicles that employ 20 million personnel. The upswing in technological innovations and government policies drive the fleet industry on the road toward digitalization.<h2 class="heading-node" id="m5ns2cs4k" style="text-align: justify">Growth and modernization of fleet industry</h2>Fleet businesses experienced significant revenue growth in the past few years for two primary reasons. One, the evolution of fleet management systems that enabled digital solutions like telematics-based route optimizations and the emergence of fleet aggregators. Fleet management systems have radically disrupted the rather traditional fleet industry by integrating modern technologies and services into the value chain. According to recent reports, fleet management systems as an industry is estimated to grow 14% yearly to 6.8 million units in 2025. As the current market penetration is hanging around 10% for the entire commercial vehicle industry, the growth potential is tremendous. The emergence of fleet aggregators has enabled seamless order and demand management and has generated great opportunities to stabilize and monitor productivity leading to sustainable profitability and growth. And two, the government of India had initiated several digital policies such as FASTag-based toll collection, digital e-way bills, and compulsory installation of GPS devices in commercial vehicles to tap into the day-to-day fleet operations data.<h2 class="heading-node" id="19bv0yegi" style="text-align: justify">Key operational challenges</h2>In spite of the brisk progression in digital adoption, the fleet industry grapples with operational inefficiencies and ineffectual resource utilization. Not all fleet operators have access to technology that helps them control costs and enhance operational excellence, productivity, and profitability. In this article, let's review the top challenges of fleet businesses and how we can help resolve the pain points. <h3 class="heading-node" id="1tw7390n0" style="text-align: justify">Truck owner&nbsp;fragmentation </h3>80% of the trucks running in the country are owned by small vendors with a maximum fleet of five or fewer trucks. These small fleet owners are outside the purview of digital tools and analytics. They lack a&nbsp;centralized platform for evaluating trip data to optimize cost and make better decisions to promote overall development and profitability. <h3 class="heading-node" id="gc9jqny5b" style="text-align: justify">Multiple stakeholders </h3>The mandates of the Indian government and ongoing digitization efforts have detangled some of the essential knots for the fleet business. However, onboarding and managing the fleet system is still a hassle. For example, FASTag wallet, fuel payments, <a class="link" href="https://m2pfintech.com/kyc-suite/" target="_blank" rel="noopener">KYC</a> of drivers, and vehicle registration on the Telematics Platform are arduous tasks involving multiple stakeholders such as Fleet Aggregators, Transporters, Oil Marketing Companies (OMCs), Banks, and National Electronic Toll Collection (NETC).Further, though the fleet payments ecosystem renders numerous digital payment solutions, they are essentially decentralized. This makes it impossible for the fleet operators to view or manage such payments/expenses under one roof. For instance, payment cards for fuel, toll booth payments via FASTag, and other miscellaneous expenses paid (via diverse modes) ought to be handled individually. <h3 class="heading-node" id="tr3d1qtao" style="text-align: justify">Capital allocation </h3>India has the largest road network covering about 98,000 km of National Highways, which is just 2% of the overall road network in the country. But 40% of the total traffic is concentrated on these highways. Nevertheless, the Indian commercial vehicle covers 300 km a day, which is relatively low compared to the global average of 500-800 km a day. A sizeable portion of this journey (~40%) is dead miles, implying trucks travel without load yet have some capital allocated for the return trip. This is done in anticipation of new orders during the return journey; otherwise, they risk missing out on orders due to a longer lead time in getting the capital allocated and the ideal vehicle at the pickup location. Due to the dynamic nature of freight orders, the capital allocated to a vehicle is not in line with the capital required for optimal utility. <h3 class="heading-node" id="bsbf6muja" style="text-align: justify">Limited access to credit&nbsp; </h3>There is a momentous improvement in the fleet industry due to the private sector participation in fleet aggregation and telematics services and government initiatives. However, lenders don't have complete access to payments and cashflows handled by the fleet owners. This results in inefficient credit decisions. For example, lenders have limited or no visibility to real-time reports in terms of daily distance covered, transactions on fuel &amp; FASTag, etc., per vehicle. This leaves lenders with inadequate information on vehicle capital utilization,&nbsp;which in turn results in inefficient credit decisions and low participation in providing working capital for fleet operations.<h2 class="heading-node" id="gjsxze3ag" style="text-align: justify">How can our centralized fleet platform help?</h2><a class="link" href="https://m2pfintech.com/fleet-drive/" target="_blank" rel="noopener">M2P'</a>s Fleet Drive serves as a centralized fleet payments management platform for the end-to-end business needs of the fleet operators, the telematics sector, and the lenders. Our platform serves as a one-stop solution for all fleet challenges by enabling harmonized payment management across trips and cohesive access to the capital for fleet operations. Our cutting-edge <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/" target="_blank" rel="noopener">API</a>-driven technology stack ensures seamless integration of the stakeholders such as NETC, OMCs, lenders, telematics, and fleet aggregators, and provides the following benefit to the fleet industry. <h3 class="heading-node" id="p4pd974mg" style="text-align: justify">Seamless onboarding and integration&nbsp; </h3>M2P's API-driven Fleet Drive Platform fosters frictionless onboarding of vehicles and drivers. It also enables hassle-free, digital, and secure integration with stakeholders such as OMCs, NETC, fuel retailers, banks providing <a class="link" href="https://m2pfintech.com/blog/how-to-implement-the-best-prepaid-payment-instrument-ppi-for-your-business/" target="_blank" rel="noopener">PPI</a> wallets, and Enterprise Resource Planning (ERP) of fleet aggregators for trip payments management.&nbsp; <h3 class="heading-node" id="e22ukte1x" style="text-align: justify">Single wallet to manage all payments </h3>The platform allows fleet owners to manage payments across FASTag, fuel, and ATM expenses throughout the trip. It also empowers the fleet owners to switch unused funds across the driver FASTag and fuel account back to the master wallet, enabling real-time capital allocation.&nbsp; <h3 class="heading-node" id="9uinlnwb5" style="text-align: justify">Real-time control and visibility&nbsp; </h3>Our Fleet Drive Platform has a centralized dashboard that provides comprehensive visibility to all on-trip operations. Fleet owners can track active vehicles, driver location, wallet balance, limit management, and capital allocation across the fleet.&nbsp; <h3 class="heading-node" id="z6ppg8kcw" style="text-align: justify">Partnership with major Oil Marketing Companies (OMCs)&nbsp; </h3>The platform facilitates stakeholders with cross-functional opportunities like fuel cashback/rewards with no surcharge on fuel payments across partner OMCs. Our API-driven technology stack supports OMCs in onboarding transporters, integrating with payment wallets, generating statements and reconciliation.&nbsp; <h3 class="heading-node" id="x498k680b" style="text-align: justify">Add value with fintech layer&nbsp; </h3>Fleet Drive Platform provides real-time reports and insights for lenders to make accurate credit decisions. With its end-to-end integration across the fleet payments ecosystem, the platform makes sure the transactions are recorded and verified for each vehicle across the entire fleet. This ensures lenders have complete visibility of the capital utilization by each fleet operator and their vehicles. They are empowered to manage risk effectively based on their Business Rule Engine (BRE) and provide credit. For Fleet Operators, adding a fintech layer to the fleet operations value chain will help in handling cash flow management based on demand and route optimizations and getting credit access from lenders.<h2 class="heading-node" id="uwglbh6eq" style="text-align: justify">360-degree Fleet Payments Management</h2>Despite the numerous advantages of the modern fleet management system, its market penetration in the fleet industry is comparatively low and lacks the finance layer to enable efficacious and secure operations. It is imperative to amalgamate the data generated by telematics &amp; fleet aggregators with the fleet payments in order to render better insights and improve the decision-making ability of the fleet operators and lenders. M2P's Fleet Drive Platform employs an API-driven technology stack to seamlessly integrate all the stakeholders to create an efficient 360-degree Fleet Payments Management. For more information on our Fleet Drive Platform, write to us at <a class="link" href="mailto:business@m2pfintech.com">business@m2pfintech.com</a>.&nbsp; <a class="link" href="https://m2pfintech.com/newsletter/" target="_blank" rel="noopener">Subscribe</a> to our newsletter and get the latest fintech news, views, and insights directly to your inbox.&nbsp; Follow us on <a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a> and <a class="link" href="https://twitter.com/m2pfintech">Twitter</a> for insightful fintech tales curated for curious minds like you.&nbsp;

Optimize Fleet Payments through Fintech Innovations

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/11/Super-Apps-in-Banking-blog_Word-press.webp" alt="M2P Fintech" title="" width="100%" height="479">Imagine an app that allows you to access your bank accounts, make payments, take out loans, handle your insurance policies, monitor your investment dashboard, and more—all in one!Wouldn't that be the epitome of convenience? Such nifty apps are no longer a fiction.&nbsp;Embrace yourself when we say these SUPER APPS are on their way to radically disrupt the way we know accessibility in digital banking.&nbsp;Before diving deep into Super apps in consumer banking, let us quickly recap what a Super app is.<h2 class="heading-node" id="ny0ld8tzi" style="text-align: justify">What are Super apps?</h2>A Super app is a single portal that powers a wide range of functions and services shaped around users' daily lifestyle needs. Technically, a super app is a collection of multiple niche applications that establish an ecosystem of fully-integrated third-party services aided by a payment system. This creates a mini operating system that acts like a digital assistant, working at the user's convenience as one can stay in the app to carry out a multitude of tasks.Although the concept has been creating massive buzz recently, it isn't new. Businesses like TenCent, Alipay, Grab, Paytm, and Gojek have been the frontrunners for years. Let us give you a quick overview of how some of these companies support an all-inclusive platform.TenCent is a Chinese company that started as a simple messaging platform (named WeChat). Once they built their billion-plus customer base, they slowly set up a network of services, including virtual wallets, payments, hotel reservations, taxi rides, medical consultations, games, and much more.An example that is closer to home is Paytm. In 2010, Paytm was launched as a payment application. Today, it offers a comprehensive set of services, including online shopping, credit cards, loans, repayments, microloans, BNPL, insurance, ticketing services, retail brokerage products, online games, and more on its platform. Given the platforms' extensive acceptance, several fintechs are now trying to recreate a similar model customized to their customer bases.<h2 class="heading-node" id="zehxh25s4" style="text-align: justify">What makes them Super?</h2>What marks off a Super app from a regular app is the element of multifunctionality, comprehensiveness, and data privacy. Further, it best suits businesses with extensive data and a large customer base. In addition, rendering a gamut of services and products through one application gives customers a sense of belonging, ownership, and safety, which significantly enhances the customer experience.Here are some of the key factors that contributed to the popularity and success of Super apps.One-click relevance: Provides customers with personalized overviews and product offers. Rolling everything customers need to transact through daily life into a Super app is one way to core relevance and success.&nbsp;Real-time communications: Chatbot interactions that offer real-time assistance, including upselling, fraud prevention, nudges, and recommendations.&nbsp;Connectivity: Anything from financial, business, lifestyle, and health to government can be accessed through one app.<h2 class="heading-node" id="n493lw6t3" style="text-align: justify">Super apps in Consumer Banking</h2>Super apps in the banking sector are a rare feat. Conversely, fintechs quickly recognized the potential of enabling ultra-personalization and budget automation using AI-powered financial assistants. They are keen to build Super apps that can leverage aggregators with established digital marketplaces to connect users with an existing ecosystem for digital banking and financial services.Ideally, a financial Super app is a multi-function digital banking and <a class="link" href="https://m2pfintech.com/blog/the-rise-of-digital-payments/" target="">payments</a> solution featuring financial services that are beyond payments. The app must enable consumers to perform most of their daily activities digitally, like bill and fee payments, purchases, fund transfers, bookings, tickets, subscriptions, investment management, and insurance purchases and management. Interestingly, the list can keep adding as many functionalities as possible to improve customer engagement and satisfaction.According to recent studies, about 50% of consumers use mobile application or website at least once a week to interact with their bank. This stands as a testimony that today's consumers and businesses expect their banks to be a tap away and swiftly adapt to their digital needs. Experts believe, with embedded finance and open banking, any provider can become a super app that serves as a gateway that delivers the ever-growing demand for convenience in the banking process — rather than just a series of disconnected/loose-ended financial services.When it comes to consumer banking, it's all about comprehensive experience in a Super app environment. And it takes more than just tech. It requires full partner-network management, a clear understanding of compliance, rights, responsibilities, liabilities, commitment to developing a broad-ranging ecosystem, and more. For instance, a <a class="link" href="https://m2pfintech.com/blog/neo-banking-101-all-you-need-to-know/">Neobank</a> can provide an 'N' number of financial products and services by integrating with regulated FI at the back end and tech-driven fintech at the front end.Essentials of Financial Super apps Intuitive user experience and interconnectedness are the cornerstones of a financial Super app. These will allow users to easily access all available features. Here are some of the key elements that a financial Super app must include:<ul class="list-node" id="52ez20cgw"><li>Shared wallet&nbsp;</li><li>Savings accounts&nbsp;</li><li>Budgeting tools&nbsp;</li><li>Bill reminders</li><li>Auto bill payments&nbsp;</li><li>Managing subscriptions&nbsp;</li><li>Investment options&nbsp;</li><li>QR code payments and rewards</li></ul><h2 class="heading-node" id="sw6d1s7fn" style="text-align: justify">How Open Banking powers Super apps?</h2>Super apps use financial data from multiple sources to create financial products and services to meet customers' needs.But how do they get to know what their users need?What provides them with the information they need to create an omni-channel experience?Enter Open Banking.Open banking is the foundation of interoperability in the banking sector. For novices, Open Banking system uses <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">APIs</a> to provide third-party financial service providers access to consumer banking, transactions, and other financial data from banks and NBFCs. To understand the working of Open Banking, read <a class="link" href="https://m2pfintech.com/blog/open-banking-a-primer-2/" target="_blank" rel="noopener">here</a>.The Open Banking system presents the platform with a spectrum of opportunities to tailor financial services to cater to each user's requirements. It employs advanced technologies like AI, ML, and Data Analytics to maximize personalization and build customer-relevant products by leveraging customers' data. Using advanced technology to analyze data and develop customer-centric products/services fosters data-sharing culture and data-driven decision-making across the ecosystem.With the help of Open Banking, Super apps can empower customers to check their account balances, make payments, track recent transactions, and perform other traditional banking operations from the app's digital wallet. This strikingly reduces the need to access a bank's app. In addition, as Open Banking expands into open finance and open data, Super apps can access and connect with a wide range of partners to augment go-to-market speed for new products and broader their customer base.<h2 class="heading-node" id="9eqqd85qv" style="text-align: justify">API Inference</h2>API infrastructure is the essence of embedded finance and open banking. A good API provider wraps intricacies like disputed payments and connecting to multiple suppliers inside the API system. This allows intended apps to work together in several ways and develop a comprehensive ecosystem. In addition, APIs empower Super apps to handle extensive, inter-connected data through multiple levels without disturbing the user journey. Fintechs leverage APIs to seamlessly incorporate functionalities into cloud-native apps. They employ full-fledged, mobile-first, customizable API stack to simplify consumer banking and enable end-to-end customer-centric retail offerings.Want to understand the nuts and bolts of Super apps? Write to us at <a class="link" href="mailto:business@m2pfintech.com">business@m2pfintech.com</a>&nbsp;&nbsp;To boot, what would an ideal Super app be for you? Let us know in the comments below.&nbsp;<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a> to our newsletter and get the latest fintech news, views, and insights directly to your inbox.&nbsp;Follow us on <a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a> and <a class="link" href="https://twitter.com/m2pfintech">Twitter</a> for insightful fintech tales curated for curious minds like you.

Super Apps in Consumer Banking - What Role does Open Banking Play?

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/MicrosoftTeams-image-109.webp" alt="M2P Fintech" title="" width="100%" height="317">Wallet limit breaches and data duplications are crucial problems for <a class="link" href="https://m2pfintech.com/blog/prepaid-cards-101-a-definitive-guide-for-growth-and-profitability/">prepaid card</a> issuers. They hold the risk of consumers overriding the loading and spending limit.That’s why <a class="link" href="https://m2pfintech.com/blog/rbis-new-guidelines-for-ppis-how-will-it-impact-the-fintech-industry/">RBI</a> mandated that all prepaid programs deploy a centralized System of Records (SOR) in&nbsp;October’17. All prepaid program partners must mandatorily connect to the issuer’s SOR system.<h2 class="heading-node" id="7x11l5ome" style="text-align: justify">What is a System of Record?</h2>A System Of Record (SOR) or Source System of Record (SSoR) is a single source of truth or data source that stores important information about a system or process within the organization. It serves as a shared reference point that protects prepaid card issuers against data repetitions that arise when individual data is created, handled, and processed by multiple individuals or business units. As a result, SOR provides a single source of truth for operations.The System of Records monitors the consolidated prepaid balance of all wallets issued to the end customer by the same issuer, independent of the prepaid program partner. It is a central ledger that tracks every registered customer’s overall balance in real-time based on their <a class="link" href="https://m2pfintech.com/blog/know-your-customer-kyc-the-need-for-authentication/">KYC</a> status. In addition to holding centralized data on the consolidated balance of a customer’s prepaid wallet, it also carries issuer-specific information. This is in cases where the balance of multiple partner wallets is integrated under a single <a class="link" href="https://m2pfintech.com/blog/how-to-implement-the-best-prepaid-payment-instrument-ppi-for-your-business/">PPI</a> issuer.<h2 class="heading-node" id="20csbnfpl" style="text-align: justify">How SOR works for prepaid cards?</h2>Say an individual holds two prepaid wallets with the same issuer. His personal information is captured in the issuer database for profile creation and <a class="link" href="https://m2pfintech.com/blog/crack-the-kyc-jigsaw-ease-onboarding-compliance/">KYC verification</a>. &nbsp;Issuers who partner with Token Service Providers for SOR will have all data automatically transferred to a centralized database. &nbsp;Then KYC-based wallet limit, dedupe check, and customer profile creation will need to be managed.<h2 class="heading-node" id="7g22xdrk5" style="text-align: justify">Why SOR is critical?</h2>SOR is critical for prepaid issuers who deal with huge volumes of data from multiple source systems. This system of truth helps secure the integrity and validity of any data set as it remains the only source of truth. If there is any other agreed system of record, the data element must be either linked to or extracted from it. In other situations, the provenance and estimated data quality should be documented.&nbsp;Here are some key benefits SOR offers to users.<ul class="list-node" id="niw8n6t1l"><li>Provides the most complete, accurate, and timely data</li><li>Best structural conformance to the data model</li><li>Nearest to the point of operational entry</li><li>Can be used to feed other systems</li></ul><h2 class="heading-node" id="vwxcavknq" style="text-align: justify">How can M2P facilitate SOR implementation?</h2>We help banks and prepaid card issuers build a SOR, which will serve as a final source of truth for all customer data. Our robust <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">API</a>-led infrastructure offers a centralized database to track and monitor the data in real-time.&nbsp; The built-in checks and balances comprise AML, negative listing, and real-time watch listing capabilities to ensure compliance and zero limit breaches across programs.Looking to implement SOR for prepaid cards?We would like to help. Write to us at business@m2pfintech.com.&nbsp;&nbsp;<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Why System Of Records (SOR) is Critical for Prepaid Card Issuers?

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Blog-Banner_02_WordPress-1.webp" alt="M2P Fintech" title="" width="100%" height="661">Imagine you own a digital wallet. Its primary function is to let you spend viz., shop with partner merchants, make payments, and transfer money to other wallets and bank accounts. Then the same wallet offers a card (any authorized card network Visa, MasterCard, RuPay) to facilitate card-based in-store and online payments. Further, the wallet also comes with a UPI virtual ID to allow payments via QR codes and <a class="link" href="https://m2pfintech.com/blog/upi-the-driver-of-economic-growth-and-inclusion/">UPI</a>.This is payments interoperability making life easy for you.<h2 class="heading-node" id="abd3">What is Payments Interoperability?</h2>Now, there are several definitions for interoperability. But at its core, it is the basic ability of multiple digital systems, applications, and databases to connect and communicate with each other.Payment platforms leverage financial technology to connect and share data among ecosystem partners, viz., banks, payment gateways, payment processors, merchants, and consumers. This integration helps carry out transactions between payment service providers, third-party processors, and other networks without hassles. The interoperability occurs at the origination point, at the network level, or through an intermediary, both in national and international payment systems.Here are a few common attributes of interoperability.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Interoperability_BlogBanner_02_wordpress.webp" alt="M2P Fintech" title="" id="7ruk1ov0f" width="100%" height="661">Payment system interoperability can be at domestic (national) and international levels.<h2 class="heading-node" id="558a">National Payments Interoperability</h2>National payment interoperability is limited to payment systems within a single country. National interoperability usually involves the same type of accounts. It happens between:<ul class="list-node" id="sk8vndtl8"><li>Deposit accounts issued by various banks</li><li>e-money transaction accounts offered by mobile network operators</li></ul>National interoperability is ensured through bilateral agreements between Payment Service Providers (PSP) and Payment Systems Infrastructures (PSIs). Or through a centralized interoperability solution, with standardized regulatory measures stipulated by the central bank.<h2 class="heading-node" id="2998">RBI’s Mandate for Domestic PPI Interoperability</h2>Governments and Central Banks are giving interoperability a significant push to accelerate cashless ecosystems. <a class="link" href="https://m2pfintech.com/blog/rbis-new-guidelines-for-ppis-how-will-it-impact-the-fintech-industry/">RBI</a> aims to make interoperability mandatory for all full-<a class="link" href="https://m2pfintech.com/blog/know-your-customer-kyc-the-need-for-authentication/">KYC</a> <a class="link" href="https://m2pfintech.com/blog/how-to-implement-the-best-prepaid-payment-instrument-ppi-for-your-business/">Prepaid Payment Instruments (PPIs</a>) and acceptance infrastructure by 31 June 2022. The move is to drive inclusion in <a class="link" href="https://m2pfintech.com/blog/ready-to-sneak-peek-into-global-cashless-societies/">cashless payments</a>, and optimally utilize payment instruments like cards and wallets, given the constraint of scarce acceptance infrastructures like point-of-sale (POS) devices, ATMs, QR codes, and bill-payment touch points. Any user who signs up for a wallet, <a class="link" href="https://m2pfintech.com/blog/prepaid-cards-101-a-definitive-guide-for-growth-and-profitability/">prepaid card</a>, or UPI on PPI rails should be able to make digital payments via any network.LivQuik is the first PPI issuer in India to achieve full interoperability as mandated by the RBI. This feat enables customers to enjoy optimized card and UPI payments across wallets. Similarly, initiatives like <a class="link" href="https://m2pfintech.com/blog/central-bank-digital-currency-cbdc-101-a-primer/">Central Bank Digital Currencies (CBDC)</a> will further drive interoperability, inclusion, and innovation.<h2 class="heading-node" id="d3b9">Need for Interoperable Cross-Border Payments</h2>Interoperability in <a class="link" href="https://m2pfintech.com/blog/cross-border-payments-a-swift-money-flow-across-borders/">cross-border payments</a> is critical to making financial services accessible, affordable, and reliable. It involves coordination between multiple stakeholders, including central banks and regulators. It encompasses technical, regulatory, and usage interoperability to enable quick, convenient, secure, and seamless transactions regardless of the Financial Services Provider (FSP) network.According to a recent Visa survey, only 50% of merchants have a cross-border trade-compatible payment processing infrastructure. Without globally interoperable payment systems, small and medium-sized merchants cannot tap into international trade and markets. Interoperability levels the playing field and eliminates the inefficiencies of a closed-loop payment systems, i.e., payments between users of only one payment provider.An end-to-end interoperable platform delivers access to cross-border payment services through an integrated gateway. It enhances the user experience through its ease-of-use customer onboarding and <a class="link" href="https://m2pfintech.com/blog/crack-the-kyc-jigsaw-ease-onboarding-compliance/">digital KYC.</a>A centralized interoperability platform calls for stringent global regulatory compliance and data security standards for utmost security. It enables faster reconciliations with real-time reporting and data-driven insights into payment patterns and customer behavior. Moreover, an automated platform saves time, reduces human error, and cuts costs. It enables infrastructure and data sharing which helps tech-driven payment ecosystems reach economies of scale.While international interoperability comes with a few challenges, it can be overcome with the support of the regulators, the global schemes, and a compatible business model across international borders and technology.<h2 class="heading-node" id="9178">Global Partnerships with Payment Networks</h2>A clear example of an interoperable <a class="link" href="https://m2pfintech.com/blog/cross-border-payments-a-swift-money-flow-across-borders/">cross-border payments</a> partnership is that between India’s <a class="link" href="https://m2pfintech.com/blog/upi-the-driver-of-economic-growth-and-inclusion/">UPI</a> and Singapore’s PayNow. The need for faster cross-border payments and <a class="link" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/">financial inclusion</a> has been a catalyst in establishing the link between India and Singapore. The interoperable link between UPI and PayNow, enables instantaneous, cost-effective, and transparent payments across borders.Now for those new to UPI, it is India’s real-time payment system with a Virtual Payment Address (VPA). It is completely mobile-based and supports person-to-person (P2P) and person-to-merchant (P2M) payments and funds transfers.And PayNow is Singapore’s real-time payment system available to all participating banks and non-bank financial institutions. It is also a mobile-based system and enables peer-to-peer funds transfer using mobile numbers, VPA, or Singapore NRIC/ FIN. The UPI-PayNow partnership is only the beginning and is established to foster faster and smoother transactions between India and Singapore.India also holds strategic partnerships with the following payments networks and banks to enable seamless, interoperable transactions on our payments rails.<ul class="list-node" id="tpyzch3q0"><li>Discover Financial Services (DFS), US</li><li>Japan Credit Bureau (JCB), Japan</li><li>Union Pay International (UPI), China</li><li>Royal Monetary Authority (RMA), Bhutan</li><li>Mashreq Bank, UAE</li><li>Lycra Network, France (in the pipeline)</li></ul><h2 class="heading-node" id="1f35">Benefits of Payments Interoperability</h2>Interoperability benefits the entire payment ecosystem, including customers, merchants, end-users, and businesses. In addition to enhancing user experience and helping mitigate security risks, it delivers the advantages below.<ul class="list-node" id="ol9tnl3en"><li>Payment flexibility:&nbsp;The ability to accept all forms of payments is a game-changer. Universal payment acceptance helps customer retention and increases customer reach. Though there are several digital payment systems and digital offerings from payment system providers, customers are not required to sign into multiple systems and complete their <a class="link" href="https://m2pfintech.com/blog/know-your-customer-kyc-the-need-for-authentication/">KYC</a> many times. Interoperability brings issuers and acquirers together to undertake, clear, and settle payment transactions across payment systems, ensuring universal payments and consumer retention.</li><li>Faster payment system: Electronic transactions are the key to reconciling and collecting payments, unlike cash-based systems. Advanced technology and fast internet connectivity make it easier to increase the speed of transactions.</li><li>Secure payment and POS integration: Integration pushes the transaction directly to the payment terminal and eliminates manual entries, thereby enhancing security.</li><li>Low operational costs:&nbsp;Integrated payment platforms reduce operating costs and seamlessly communicate with multiple devices across different financial service providers. It helps save money on adding new payment terminals.</li></ul><h2 class="heading-node" id="0b67">Addressing Challenges — Getting it Right</h2>Getting interoperability right through open <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">API</a>-based platforms is a start toward harnessing and expanding the payments ecosystem. Interoperability can be tricky when dealing with legacy systems. Technical challenges usually comprise systems that use different technical standards, communication protocols, and related software and hardware infrastructure. Another common challenge relates to data and semantics. Payment systems may use different languages and need to be translated. Inadequate translation leads to corrupted or lost data.It is crucial to address the regulatory, technical, and business challenges of interoperability to make cross-border payments affordable, faster, transparent, and inclusive. Strategic partnerships with fintech firms, banks, exchange houses, and Money Transfer Operators (MTOs) with a focus on regulatory compliance and technology innovation will pave the way to overcome challenges and enable frictionless international transactions.<h2 class="heading-node" id="99d4">Need of the Hour for Today’s Generation</h2>Payments interoperability is the linchpin of today’s digitized economy. When done right, it can lead to greater convenience, speed, reliability, security, and seamlessness. It is the need of the hour today, as it enables people from all walks of life to benefit from the convenience that the cashless economy offers. It can increase service offerings, reduce costs, empower the end-user and help improve payment systems. Thus, interoperability is a strong facilitator for financial inclusion.By leveraging <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">API</a>-based <a class="link" href="https://m2pfintech.com/blog/cross-border-payments-a-swift-money-flow-across-borders/">cross-border payment platforms</a> with simple integrations across domestic switches, bank accounts, mobile wallets/e-wallets, MTO transfers, and forex card solutions, we can enable financial inclusion and seamless payments across APAC and MENA regions. With India to start with and then extended globally.Along these lines, M2P is proud to partner with LivQuik for <a class="link" href="https://m2pfintech.com/blog/upi-the-driver-of-economic-growth-and-inclusion/">UPI</a> services on exiting <a class="link" href="https://m2pfintech.com/blog/how-to-implement-the-best-prepaid-payment-instrument-ppi-for-your-business/">PPI</a> offerings like cards, wallets, gift certificates, and other products. Thereby enabling interoperable payments on the LivQuik platform.Want to know more about building interoperable payment systems?Write to us at business@m2pfintech.com.<a class="link au ly" href="https://forms.gle/kJgVoD29t2vcxtbp9" target="_blank" rel="noopener ugc nofollow">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link au ly" href="https://www.linkedin.com/company/m2pfintech/mycompany/" target="_blank" rel="noopener ugc nofollow">LinkedIn</a>&nbsp;and&nbsp;<a class="link au ly" href="https://twitter.com/m2pfintech" target="_blank" rel="noopener ugc nofollow">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Why Payments Interoperability is a Must for Today’s Generation?

API -The Power that Drives New-Age Banking Ecosystems

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/04/banner1251-2.webp" alt="M2P Fintech" title="" width="100%" height="447">Blockchain is crossing its chasm and it might be stumbling its way towards knocking on the doors of many other industries. Still, the scope of its application and ideas challenges the present technologies in the field. This technology, still young and fresh, continually offers its beneficiaries data transparency, security, and quicker transactions.Awaiting to join hands with fintech <a class="link" href="https://m2pfintech.com/blog/the-world-of-apis-how-they-power-fintech/">APIs</a> blockchain promises, to accelerate numerous applications to the front row. Unfortunately, the innovators and investors are not on the same page yet on bringing the dreams of <a class="link" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/">fintech</a> operations into practice.Still, one cannot overlook the potential of blockchain technology because bitcoin efficacy is proved through the decentralized protocol algorithm of Blockchain.The use cases of Blockchain in Fintech are discussed below along with the deterrents of the operational practices too.<h2 class="heading-node" id="ea1b" style="text-align: justify">What is Blockchain?</h2>Blockchain is a database: digital, decentralized database. A series of blocks containing transaction data, a hash identity, and node details are connected to form a chain. They are linked to their previous block with immutable characteristics. It also facilitates the process of recording, managing, and tracking assets. Assets can be tangible and intangible, and virtually anything of value can be traded on a blockchain network. It reduces risk and costs for all the parties involved.The reason why Blockchain is now on an accelerated trend is that it is fast. As a business runs on information, the quicker it is received. The more accurate the information is, the faster the business reaps results. The security aspect of Blockchain is well coveted as it can be accessed by individuals who have the key. It offers a single view where even a single modification will be known to all the members.<h2 class="heading-node" id="3ca3" style="text-align: justify">How does Blockchain work?</h2>Blockchain records validate and store the data in its database. So, it has the privilege to validate a transaction. However, it does not simply hold the data but also every nuance that happened in the transaction.<ol class="list-node" id="khl9t5q91"><li>User requests for a transaction of any type involved with or without contracts, cryptocurrency, information, or any other records.</li><li>Now the requested information is sent to various nodes of the P2P network (the people involved in the transaction) for validation.</li><li>The validation of the nodes and the user status is recorded and updated by the algorithms.</li><li>Once the transaction is complete, a new block is added with the recorded data to the previous block .</li></ol>Each block contains the following information<ul class="list-node" id="30nibfo2u"><li>A Hash pointer (link to the previous block)</li><li>A timestamp</li><li>Transaction data</li></ul><img src="https://miro.medium.com/max/1400/1*ymase2KIJyghd5SKYaPm2Q.png" alt="M2P Fintech" title="" width="100%" height="358"><h2 class="heading-node" id="a369" style="text-align: justify">What gives Blockchain its power?</h2>Blockchain destroys cybercrime attacks with its decentralized ledger. The conventional centralized ledger in <a class="link" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/">Fintech</a> opens pathways to fraudulent activities despite its easy access — vulnerable to&nbsp;cybercrimes. In the case of the Blockchain, the distributed P2P network allows more than one node (device) to validate, authenticate and approve transactions.Moreover, the nodes cannot alter any transaction data without their peer nodes.A decentralized ledger is the core concept of Blockchain technology that makes it completely superior. This operational protocol helps holds numerous features such as embezzlement in check.Blockchain characteristics are flexible enough to bend at few places and remain immutable at other occurrences. Moreover, it comes with complete security compliance, avoids fraud, and is scalable with any form of transaction.Reliability: It removes the double records because it certifies and identifies the transaction of each party.Unchangeable transactions: You cannot edit or remove the transactions but only add. The chronological ordering stores each block with a timestamp.Reduces Frauds: The P2P network validates the transaction request and reduces the chance of embezzlement.Collaboration: Removes the third party from the transaction. The dream of digital banks, neo banks complying with all the strict regulations is possible with blockchain technology.Transparency: Transaction details are public to everyone, including changes (parties involved in the transaction). It solves the credibility and trust challenges of Fintech.<h2 class="heading-node" id="5838" style="text-align: justify">How Blockchain is transforming Fintech?</h2>Blockchain is silently proving its invincibility in the fintech industry. However, underpinning Blockchain is to the transformative growth of Fintech; it is abstained by a large crowd due to operational reality.Ripple connect and Ethereum has found their ways into early adopters door but could not cross the chasm cycle yet. Effectively, the technology contributes to reliable finance systems through robust algorithms: distributed technology in record keeping and transactions with the decentralized protocol eliminating thousands of paperwork.The infant technology is fruitful for Fintech, especially in shaping retail banking services.<ol class="list-node" id="hehe9ly9f"><li>RTP solutions: Sending money will only take a matter of minutes. Implementing RTP has been risky with the traditional banking process, but Blockchain accelerates the implementation process. As a result, irrespective of any app used for money transfer, transactions will happen securely.</li><li><a class="link" href="https://m2pfintech.com/blog/cross-border-payments-a-swift-money-flow-across-borders/">Cross-border Payments:</a>&nbsp;While setting up to collect or fund transfer across other countries, the limitations make the process slow, tiresome and challenging. With Blockchain, the restrictions can be melted. In addition, it is an entirely internet-based operation which removes the need for an additional setup cost.</li><li>Smart Contracts &amp; Recurring Payments:&nbsp;For SaaS &amp; B2B industries, smart contracts will help secure credible transactions that can be released based on a completed action, event, or conditions. It is useful when the goods are delivered, and the funds are released in the logistics.</li></ol><h2 class="heading-node" id="3afc" style="text-align: justify">Blockchain use case scenario in RTP solutions &amp; cross-border payments</h2>From 2017, there are speculations of the use of Blockchain in the fintech field, as of now, no direct confirmation apart from Ripple and Ethereum using their Blockchain in real-time settlements and <a class="link" href="https://m2pfintech.com/blog/cross-border-payments-a-swift-money-flow-across-borders/">cross-border payments</a> — a real challenge in retail banking.RTP &amp; <a class="link" href="https://m2pfintech.com/blog/forex-cards-international-travel-made-effortless/">international payment</a> processing solutions are slow because of the conjecture of the third parties in stock markets, healthcare, and cryptocurrency. However, blockchain usage can lift the barrier in a few cases if the compliance has been favorable. Thus, it may not remove the third party entirely but speed up the process.In cross-border and RTP solutions, the payment systems still need a third party till the regulations are changed. But with cryptocurrency, the need for the traditional infrastructure banking setup can be overridden. First, the currency of the payer can be converted to bitcoin or any other fiat currencies. Then the payment can be approved by the distributed electronic ledger protocol.Then the receiver will get the settlement in the original currency. It involves an additional step of converting the currency to crypto and then back to the original format. Of course, it increases a few complications. Still, given the present tech innovations in the market, this is an easy pie.A group of consortium banks in Japan is currently running on this tech innovation method to collect international and RTP domestic payments.<h2 class="heading-node" id="0b95" style="text-align: justify">Fintech Blockchain Use cases</h2><h3 class="heading-node" id="c07b" style="text-align: justify">Smart contracts</h3>An exciting branch of Blockchain is the smart contract. The capability of smart contracts is transformative enough to disrupt the automation process in the future. Adding a bit of AI or edge intelligence, smart contracts will be more intelligent: they can trigger AI decisions.In 2016, financial consortium R3 and its member banks completed trade finance prototypes that used smart contracts to process factoring transactions and letters of credit. Smart contracts have high leverage on places where escrow is high. When a synchronized chain of actions happens upon if/ else statements drawn by both parties, it is a win-win situation.<h3 class="heading-node" id="6c71" style="text-align: justify">KYC</h3><a class="link" href="https://m2pfintech.com/blog/know-your-customer-kyc-the-need-for-authentication/">Know Your Customer</a> (KYC) is a regulation now, and it is mandatory for consumers to enjoy frictionless payment advancements. But <a class="link" href="https://m2pfintech.com/blog/crack-the-kyc-jigsaw-ease-onboarding-compliance/">overcoming KYC challenges</a>, and establishing the identity of the customer without barging into their privacy is complex. The transparency of Blockchain enables identity verification without disclosing the true identity. It sounds like beating around the bush, but the protocol allows to establish, verify and transact based on digital identities of all the counterfeits.<h3 class="heading-node" id="d839" style="text-align: justify">Escrow — freelance</h3>Freelance opportunities are booming everywhere, thanks to COVID; however, the escrow is high. For a platform like Upwork, satisfying both sides is a requirement without any compromise. The best way to solve these problems is through smart contracts. Transferring the deliverables based on effective agreed rules from both parties can enable a seamless functioning of the whole platform.<h3 class="heading-node" id="d2b7" style="text-align: justify">Recurring Payments</h3>In B2B, the payments usually take 3–4 days to complete, which is quite annoying nowadays. The middlemen in the process are co-dependent with the paperwork, which delays the sales cycle even further. Intelligent contracts can plunge in with the idea of its transparent agreement terms, making recurring payments every month or year easy. The contract triggers the next step of the action only if both the parties are convinced, so it gives complete control to the buyer and the sellerBlockchain is waiting for its massive scaling, and 2021 is the year for its spark plug. The industry is quite busy solving its problems with operational constraints. Yet, we have pretty a trend waiting to breach in soon, at least into the payment ecosystems under the fintech radar.To know more about blockchain, write to us at business@m2pfintech.com.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Blockchain and Fintech-Use cases and Applications

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/04/banner-1251-1.webp" alt="Account Aggregator" title="" id="9hxp4jacw" width="100%" height="479">Data is a gold mine that drives insights and efficiencies across industries. Gartner predicts that by 2023, companies that actively leverage shared data will outperform their peers in crucial metrics. With 180+ zettabytes of data estimated to be created by 2025, businesses across industries need to devise strategies to gain access to relevant consumer information. Such access will drive insight-driven decisions to boost revenue, <a class="link" href="https://m2pfintech.com/blog/why-is-risk-based-authentication-rba-critical-for-banks/">mitigate risks</a>, and reduce costs.<h2 class="heading-node" id="134f" style="text-align: justify">Consent-based digital access to data</h2>Account aggregators or financial data aggregators play a significant role in enabling data access to financial institutions, businesses, and individuals. Prioritizing fiduciary consumer relationships, account aggregators share digitally signed and encrypted data upon explicit consumer consent.<h2 class="heading-node" id="160d" style="text-align: justify">Financial data aggregation in India</h2>India launched its Account Aggregator (AA) network in September 2021, as the first step towards open banking. Built on the Data Empowerment and Protection Architecture (DEPA), the account aggregator framework is the world’s leading consensual data-sharing infrastructure.This digital data access structure serves as a substantial digital enablement initiative after the launch of public infrastructure for digital identification (Aadhaar) and <a class="link" href="https://m2pfintech.com/blog/the-rise-of-digital-payments/" target="">digital payments</a> (UPI). Millions of customers can now digitally access and share their financial data in a compliant manner.<h2 class="heading-node" id="019c" style="text-align: justify">Potential to transform efficiencies</h2>The AA framework holds the potential to transform the efficiencies and profitability of financial institutions and businesses in India. Banks, fintechs, and NBFCs can use consumer data to widen target-base, personalize services, lower risks, enhance customer experience, and future-proof their product portfolio. Collecting, cleansing, and synthesizing pertinent data helps enhance insight-driven decisions and executions.Democratization of data access via account aggregator networks has brought in a win-win scenario for businesses, consumers, and <a class="link" href="https://m2pfintech.com/blog/digital-lending-open-credit-enablement-network/">new-age digital lenders</a> with advanced underwriting algorithms and a larger risk appetite. They have broken the data monopoly of digital and financial services firms by transferring data sharing power to individuals.<h2 class="heading-node" id="a06c" style="text-align: justify">So, who are account aggregators in India?</h2>Account aggregators are NBFC-AA licensed entities that are regulated by the RBI. Contrary to the name, they cannot ‘aggregate’ data. They only enable consensual data sharing and access between consumers and financial institutions in the network. Account aggregators cannot read or resell data. They can carry data from one financial institution to another based on individual consent and direction. Consumers also have the choice to revoke data already shared.<h2 class="heading-node" id="b934" style="text-align: justify">How account aggregation happens?</h2>Data gathering, collation, and dissemination are enabled through open <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">Application Programming Interface (API</a>) connections.<h2 class="heading-node" id="e756" style="text-align: justify">Do account aggregators benefit individuals?</h2>The answer is yes.Account aggregators help consumers get rid of laborious paperwork, effort, and security issues involved in notarizing, stamping, signing and scanning physical copies of bank statements. Users need not have to expose themselves to vulnerabilities of sharing login credentials and financial history to a third party.With mobile-based digital data access and sharing process, account aggregators eliminate the conventional hassles of data access and sharing. People across demographics will get access to experiential, preference-based financial services and products. While the affluent will experience value through customized investment and insurance options, the popular masses will enjoy greater inclusiveness through friction-free access to formal credit.<h2 class="heading-node" id="0dd3" style="text-align: justify">Participants in the AA network</h2>While individuals and small businesses form the epicentre, the AA network comprises the three participants listed below.1. Financial Information Providers (FIP)&nbsp;— Data sources like banks, tax platforms &amp; insurance providers.2. Financial Information Users (FIU)&nbsp;— Data recipients such as banks, NBFCs, and <a class="link" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/">fintech</a> firms.3. Account Aggregators (AA)&nbsp;— RBI-regulated entities that facilitate real-time data sharing.<img src="https://miro.medium.com/max/1400/1*UnkSCGfGWZf-YpOqny9J7w.jpeg" alt="M2P Fintech" title="" width="100%" height="384">Source: PIB Delhi<h2 class="heading-node" id="72d9" style="text-align: justify">Banks in the AA network</h2>The top eight banks (listed below) that cater to over 300 million consumers have joined the AA network.1. Axis Bank2. ICICI Bank3. IndusInd Bank4. HDFC Bank5. Kotak Mahindra Bank6. IDFC First Bank7. Federal Bank8. State Bank of India<h2 class="heading-node" id="d405" style="text-align: justify">What kind of data does AAs share? How are they different from Aadhar eKYC, credit bureau, and CKYC?</h2>Central Know Your Customer (<a class="link" href="https://m2pfintech.com/blog/know-your-customer-kyc-the-need-for-authentication/">CKYC</a>) registry and paperless Aadhar Electronic Know Your Customer (<a class="link" href="https://m2pfintech.com/blog/know-your-customer-kyc-the-need-for-authentication/">EKYC</a>) capture identity verification and only shares data such as name, address, and gender. And credit bureaus reveal only the credit score, loan, and repayment history of consumers.On the other hand, account aggregators facilitate transaction data sharing from savings, <a class="link" href="https://m2pfintech.com/blog/how-can-banks-and-nbfcs-leverage-the-potential-of-digital-fds/">deposits</a>, or current accounts. They share data pertaining to consumer bank transactions, tax, pension, securities, insurance, and much more.<h2 class="heading-node" id="5e7e" style="text-align: justify">Is data sharing via AA network secure?</h2>Data shared on the account aggregator network is completely secure. It is encrypted by the sender and can be decrypted only by the intended recipient. End-to-end encryptions and digital signatures remove vulnerabilities and secure the process.<h2 class="heading-node" id="42b2" style="text-align: justify">What if consumers choose not to share data?</h2>By all means, a consumer can choose not to share any data. Joining the AA network or registering for data sharing is completely voluntary. They can link the account of their choice, enable or revoke data access at any point in time.<h2 class="heading-node" id="b9c4" style="text-align: justify">Use cases for account aggregator network</h2>Here are use cases in which account aggregators can drive efficiencies and add value to consumers and financial institutions.Personal finance management&nbsp;— Consumers can analyze personal spends across accounts, which will help generate recommendations to streamline expenditure. This process will enable better personal finance goals and budgetary adherence for consumers.Cashflow-based lending&nbsp;— Consuming data from FIPs, FIUs can get better visibility into the cash flow of applicants. Cashflow-based lending will accelerate mainstream lending, especially in SME and MSME credit space.Alternate data for credit assessment&nbsp;— Evaluating a consumer’s creditworthiness is a true challenge if there is inadequate data on his income or payment history. If credit applicants who do not have formal credit access could share their telecom bill payment to the lender, this will generate an alternate data set to assess creditworthiness.Loan monitoring for predictive default analysis&nbsp;— Every lender will want visibility into the borrower’s financial behavior to ensure discipline in repayments. The income and outflow from a person’s bank account could reveal his financial behavior. And this could help lenders predict default patterns.Selling customized financial products&nbsp;— Accessing data concerning consumer behavior with financial products will help financial institutions involved in wealth management and insurance customize their products.Wealth management&nbsp;— Imagine a customer has invested in insurance from A, mutual fund from B, Gold deposits from C, and savings account from D. An account aggregator can unify all this data and help wealth managers handle customers' portfolios more efficiently.Accounts reconciliation for small businesses&nbsp;— With account aggregators, SMEs and MSMEs would not require to manually feed in Tally/ QuickBooks for their daily invoices. They can simply consent to platforms to consume data from FIPs and derisk manual errors.Unified nomination register&nbsp;— Nominations in financial products today are decentralized, hence have to be managed individually. A joint collaboration between the account aggregator and the unified nomination register can solve this.Now, these are not all. We have just scratched the surface of the use cases that account aggregators could have. When more pipelines get enabled on AA network, the use cases will grow exponentially. Then they will have to address concerns surrounding platform stability, data privacy, and grievance redressal mechanisms.M2P believes in democratizing credit by empowering lenders with alternate data/ surrogate channels. Should you be looking for a partner who could help you look beyond conventional credit applicants' data, write to us at&nbsp;<a class="link" href="mailto:business@m2pfintech.com">business@m2pfintech.com</a><a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

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